Articles Posted in Employee Benefits

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One aspect of the Patient Protection and Affordable Care Act (ACA) (aka “Obamacare”) that has been in the news recently is the provision of the law that requires employers with 50 or more full-time employees (defined as employees who work 30 or more hours per week or 130 hours per month) to provide health insurance to these full-time employees. Many have argued that this mandate will lead employers to reduce the number of hours that employees work and/or reduce the number of employees they employ so that they don’t have to provide employees with health insurance. Law firms that advise employers have warned employers that these attempts to evade the mandates of the ACA could be illegal. See here, here, and here.

The ACA contains a “whistleblower” provision which, among other things, prohibits an employer from taking any adverse action against an employee because he received a subsidy or tax credit to purchase health insurance. This whistleblower provision was included in the ACA because of a concern that employers would fire employees who obtained these tax credits or subsidies since, if the employer was large enough, it could be fined for not providing those employees with health insurance. If you use a government subsidy or tax credit to purchase health insurance and your employer retaliates against you, contact an experienced employment lawyer immediately because the time limits to pursue legal action are short.

Law firms that advise employers have cautioned them that reducing employees’ hours so that they are no longer full-time, and not eligible for health insurance under the ACA, could violate section 510 of the Employee Retirement Income Security Act (ERISA). Section 510, among other things, prohibits an employer from taking adverse action against an employee with the intention of preventing that employee from becoming entitled to an employee benefit. So, while this argument has not been tested in the courts yet, it may very well be illegal for an employer to reduce an employee’s hours to prevent him from becoming entitled to health insurance under the ACA. If your employer has decided to reduce employees’ hours in order to evade the requirements of the ACA, you should also contact an experienced employment lawyer to learn more about your rights.

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Today, the Connecticut Department of Labor (CDOL) announced that in January and February, 2012, it issued “Stop Work orders” to 19 companies working on construction projects in Connecticut. One of these companies was Deanes, Inc., a Maine based company that was working on a rest stop on I-95 in Milford, Connecticut. “Stop Work orders,” according to CDOL, “are levied against companies that misclassify workers as independent contractors with the intent of avoiding their obligations under federal and state employment laws covering such matters as workers’ compensation, unemployment taxes and payroll reporting.”

CDOL has collected $250,000 in civil penalties as a result of the Stop Work orders it issued between January 26 and February 23, 2012.

If you believe that your employer has misclassified you as an independent contractor, you should contact an experienced employment lawyer to learn about your rights. By misclassifying you as an independent contractor, your employer may be depriving you of wages by not paying you overtime; or it may be putting your livelihood at risk by not providing you with workers compensation insurance coverage.

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Sen. Susan Collins (R-ME) is sponsoring a bill that would, among other things, return roughly $11 billion to the U.S. Postal Service (USPS) from the Federal Employee Retirement System (FERS). According to Collins, the $11 billion is equal to the amount of money that USPS has overpaid in pension contributions. By returning this money to USPS, it could offer incentives to employees if they retired. The goal would be to reduce the USPS’ workforce by about 100,000 through these incentives.

The bill would also reform the federal workers’ compensation program. According to Collins, the bill “would bring federal benefits more in line with compensation levels offered under most states’ laws, and encourage more employees who are able to work to return to the workforce.”

Joe Lieberman (I/D-CT), Tom Carper (D-DE), and Scott Brown (R-MA) are also sponsoring the bill.

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Many employers in Maine and across the country engage in the practice of misclassifying employees as independent contractors. Misclassification is sometimes called “1099’ing” because of the 1099 tax form independent contractors receive instead of a W-2 form. While misclassification is illegal, it can save employers as much as 30% in payroll and related taxes that they would have to pay if they correctly classified their workers as employees. Employees who are misclassified as independent contractors can miss out on workers compensation insurance, unemployment insurance, fair pay, and other workplace protections.

The National Employment Law Project (NELP) has published a report which identifies the steps various states have taken in the past year to combat the problem of misclassification. The report identifies a new section of Maine’s Workers Compensation Act which sets special rules for when employers can classify workers in the trucking and messenger service industries as independent contractors. Under this statute, workers in these industries are presumed to be employees and employers can only classify them as independent contractors if they can satisfy specific criteria. To illustrate, under this statute, if a worker is not covered by his employer’s workers compensation insurance, and he does not own or lease the vehicle he uses for work, his employer cannot classify him as an independent contractor.

In addition to legislative action, the NELP report identifies some states that have stepped up enforcement of laws already on the books. For instance, in the past year, Massachusetts’ Joint Task Force on the Underground Economy and Employee Misclassification has recovered nearly $6.5 million through its enforcement efforts–which included $2 million in unpaid unemployment insurance taxes. Recently, there have been reports of rising unemployment insurance tax rates in Maine. Increased enforcement actions against employers who misclassify their workers as independent contractors could help eliminate the need to raise these tax rates. If employers who are violating the law are forced to pay the taxes that the law requires them to pay, the rates can be lower for all employers.

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Today, Senator Susan Collins (R-ME) and Senator Joseph Lieberman (I-CT) introduced a bill in the U.S. Senate that would extend employment benefits to the same-sex partners of federal employees. Senator Collins explained the reason for introducing the bill as follows: “The federal government must compete with the private sector when it comes to attracting the most qualified, skilled, and dedicated employees. Today, health, medical, and other benefits are a major component of any competitive employment package.” If passed, this bill would bring the federal government more in line with the law in Maine, which requires employers to offer certain domestic partnership benefits to qualifying domestic partners.

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In the coming legislative session, Republicans are going to try to enact reforms that will impact Maine state employees. For instance, they have proposed an elimination of the Labor Committee in the Maine legislature which has jurisdiction over issues such as workplace safety and wage laws.

Republicans have also proposed so-called “right to work” legislation. Such legislation would allow a state employee to decide that he would rather free-ride on the benefits the union extracts from the state instead of paying union dues. Of course, many individuals would likely take this free ride because they want the benefits of union membership without paying for them. This would likely weaken the union and water down the benefits that state employees enjoy.

Republicans claim that they have proposed these reforms because of an under-funded pension system and other budgetary constraints. If you have an opinion about these, and other, proposed reforms, you should contact your representative.

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In Maine, unlike most states, state employees do not pay into the federal Social Security system. Some Maine legislators are seeking to change that. Under the current system, only 1 in 5 employees receives a full pension because most employees do not work for the State long enough to get the full pension. For most State employees, when they move to a new employer, they take no pension and no Social Security credit with them. The legislators looking to change the system want State employees to be able to get credit under the Social Security system that they can take with them if they leave State employment. They believe that this change would also help fill a hole in the funding of the Maine State Retirement System.

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When an employer involuntarily terminates an employee, the employee is eligible for COBRA benefits. Under COBRA, a federal law, an employee who faces involuntary termination can pay out of his own pocket to continue his or her health insurance. This is usually too expensive for employees who just lost a job. That is why, in response to the recession, Congress previously enacted legislation that provided subsidies to people eligible for COBRA benefits so that they could buy COBRA coverage. Those subsidies were set to expire on December 31, 2009. However, on December 21, 2009, the President signed legislation that extended the eligibility for the subsidy to those individuals who are involuntarily terminated and become eligible for COBRA coverage before February 28, 2010.